April 27, 2017
Today, the Consumer Financial Protection Bureau announced that it has filed a complaint in federal district court against four online installment loan companies that serve as arms of Native American tribes based in California - Golden Valley Lending, Inc., Silver Cloud Financial, Inc., Mountain Summit Financial, Inc., and Majestic Lake Financial, Inc. The Bureau alleges that the online lenders collected, or attempted to collect, payments for loans that were void in whole or in part because they violated state laws governing interest rate caps or the licensing of lenders, or both. According to the Bureau, the lenders deceived the borrowers by collecting debts they were not legally owed in violation of the Truth in Lending Act and the Dodd-Frank Act. In addition, the Bureau alleges that the lenders' websites, as well as the lenders' representatives, did not disclose the annual percentage rates that would apply to prospective borrowers' loans.
The Bureau is seeking monetary relief for consumers, civil money penalties, and injunctive relief, including a prohibition on collecting on void loans. The complaint sets up another opportunity for a court to consider how effective tribal sovereign immunity is in combatting CFPB assertions of wrongdoing.